dunnhumby has released The Future of Retail Revenues Must Be Data Led, a November 2019 commissioned study conducted by Forrester Consulting, that found 85% of global grocery retailers lack the capabilities, technology, people and processes to use insights to monetise their data and drive customer experience in the $5.9 trillion worldwide grocery retail market. Despite the apparent barriers, the majority (83%) of Australian grocery retailers list growing new revenue streams as the top priority in 2020 and plan to do so by improving their use of data insights to develop customer strategies (84%) and to make business decisions (82%).
"Many businesses in the global grocery market are in a fight for survival with heightened competition from discounters, pure plays and other non-traditional competitors, whilst the cost of doing business is increasing, further squeezing razor-thin margins,” said David Clements, Global Retail Director at dunnhumby.
“We commissioned this study to better understand why so many retailers aren’t taking advantage of new revenue streams, while improving the shopping experience for their customers. We believe the study findings highlight the growing importance of the role of customer data in attaining sustainable growth.”
Key findings from the study include:
- Just 15% of global grocery retailers are Leaders, differentiated by data-led customer strategies for growth and improved supplier relationships, while the majority are lagging behind. Forrester uncovered three levels of maturity in grocery retail: leaders (15%), intermediate (55%) and novice (30%). Leaders set themselves apart by showing improved CPG supplier collaboration with 1) sharing customer data insights, 2) providing insights and measurement solutions to support media planning, and 3) negotiating retail media placements as part of their annual trade agreements. Regionally, retailers in the United States, Brazil, Italy, United Kingdom, and Thailand standout as early leaders in developing customer strategies that drive revenue growth.
- Almost all global retailers (96%) are experiencing significant challenges when trying to use data to develop customer strategies to drive growth – meanwhile all Australian retailers (100%) are struggling with this. Australian retailers are facing several obstacles including cultural barriers to using data to drive decision making (51%). The other main challenges are a lack of access to data (43%), lack of data management tools or technology (40%), and an inability to harmonise data and recommendations across channels, banners, brands, and locations (37%).
- Most grocers are already capitalising on the revenue potential of customer data and in-store/online media channels. Social media (57%), mobile apps (54%), customer data (54%), promotions data (54%), customer location (31%) and web metric/clickstream data (34%) areAustralian grocers’ top sources of using customer data to capitalise on revenue potential.
- Majority of grocers leave money on the table by not monetising media assets. Only 42% of grocers are currently selling branding opportunities on their website and only 37% offer media placements in-store and on their print media. Only 31% of global grocers are selling branding opportunities on their mobile apps except for Brazil (49%), China (47%), and Spain (38%) where apps are used more frequently.
- 96% of grocers who offer media opportunities for CPG suppliers on their apps saw an increase in revenue over the last 12 months, with 40% seeing an increase of more than 10%. In addition, 92% of firms offering ads and branding opportunities on their websites saw an increase in revenue from this channel.
“Time is of the essence for grocery retailers to activate the data they already have to improve the customer experience and create new revenue streams that can support their businesses into the future,” said Clements. “There is a significant amount of untapped revenue in grocery. Those that unlock the potential of their data and media assets, and improved supplier collaboration, will thrive. Retailers that fail to adapt will fall behind in the increasingly competitive marketplace.”
The full study is available for download today at: https://www.dunnhumby.com/resources/reports/forrester-future-retail-revenues-must-be-data-led